Relationship of Punjab National Bank with NIFTY 50
AUTHOR: Pratiksha Tanavade F3 (021330024203)
INTRODUCTION:
PUNJAB NATIONAL BANK
Punjab National Bank (PNB) is one of India’s oldest and most significant public sector banks, established in 1894. PNB offers a wide range of financial services, including retail banking, corporate banking, investment banking, mortgage loans, private banking, wealth management, and insurance. PNB is listed on the Bombay Stock Exchange (BSE) and on the National Stock Exchange (NSE). As of October 2024, PNB’s stock price is around ₹101.50, with notable fluctuations throughout the year. The bank’s market capitalization is approximately ₹1,16,653.37 crore.
Object:
To find out the Beta (β) of Punjab National Bank and its significance.
Data Collection:
I have downloaded the data for NIFTY50 and Punjab National Bank for the duration of 01-05-2023 to 30-04-2024 from the NSE website. Using this data, I found the weekly closing prices for Fridays. Subsequently, I calculated the weekly returns based on these prices. The formula used to find the weekly returns was (Yt+1-Yt)/Yt*100 (i.e. (C3-C2/C2*100). The weekly return of Nifty was taken as (X) in terms of company Punjab National Bank as (Y) is taken. Y was regressed on X.
Data analysis:
Regression equation:
Y = intercept of Punjab National Bank + β Weekly return of NIFTY 50
Weekly return of PNB = 330.136 – 0.0172 Weekly Returns of NIFTY 50
(t-stat = -11.4243)
N = 49, = 0.7393, F = 130.515, P(VALUE)= 4.99E-15 (4.99 x 10^-15)
The above equation shows the relationship between Nifty 50 and Punjab National Bank, the negative sign before the co-efficient of Nifty 50, tells us that there is a negative relationship. If the Nifty rises by 1 unit, Punjab National Bank will fall by 0.0172 units and vice versa.
The figure in bracket is t stats as (-11.424) for beta. The P-value for which is 4.99E-15 which is less than 0.05, which means β is statistically significant.
For N= 49, = 0.7393, which means 73.93% of PNB’s return explained by NIFTY50.
F = 130.515 and the P value for that variable is 4.99E-15, it is less than 0.05 meaning the overall model is statistically significant at a 5% level.
Conclusion:
As per the given data of RELATIONSHIP OF PUNJAB NATIONAL BANK WITH NIFTY50. We know that: – β value < 1 and negative, means PUNJAB NATIONAL BANK is not good for investment. Investment in this company is not beneficial.